4 Retirement Questions to Ask Before 'How Much Should I Save?'

Instead of focusing on your retirement "number," focus on what you want your retirement to look like. Once you figure that out, you'll be in a much better position to know what it'll take to make that goal a reality.

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By Joe Vietri, Charles Schwab

published 17 February 2020

in Features

One of the most common questions we get from our clients is, “How much do I need to save to retire?”

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To answer this question, we recommend focusing first on a few mostly non-financial questions designed to help you picture what “retirement” means to you. Starting with these questions can help make the financial planning process less intimidating and more fun and fruitful, too. Below are a few examples:

1. Have you considered a “second act” career in retirement?

According to a recent Charles Schwab survey, more than 40% of people within five years of retirement said they want to continue working in retirement.* Whether you’re scaling back hours at your current job, planning to kick off a new career or pursuing a passion project, finding your “second act” has some tangible advantages when it comes to retirement planning. Along with the benefits of staying active, by continuing to earn a paycheck you mitigate the need to deplete existing savings.

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2. Would you rather take “mini-retirements” and postpone long-term retirement?

While most people still envision retirement as a point later in life when they stop working altogether, the idea of taking time off from work for extended periods — to travel, raise a family or simply take a break — at various life milestones is becoming more common. If this sounds appealing, it will require some diligent planning and saving along the way and will impact the way you think about saving for a traditional retirement down the road.

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3. How important is it to leave a financial legacy?

For some clients, an important goal is to leave money to family, friends or a charity after they pass, which of course impacts how you might plan for and spend during retirement. Estate planning isn’t just for the ultra-wealthy — most people should create a basic estate plan, including a will that outlines how you would like your assets to be distributed.

4. Do you and your spouse or partner have the same retirement lifestyle vision?

If you are in a relationship, it’s a good idea to get on the same page when it comes to retirement. Do you want to be active? Are you planning to stay in your current home or retire elsewhere?

Getting at the heart of what retirement means to you is a crucial step toward figuring out the nitty gritty of how much to save to meet your retirement goals. Once you’ve started to outline a picture of what your retirement might look like, a financial adviser can help you put pen to paper on a plan to achieve those goals. If you’re nearing retirement, an adviser also can work with you to create a retirement income plan, including guidance to help you:

Review your investments to ensure they’re aligned with your tolerance for risk.
Determine how much to withdraw on an annual or monthly basis.
Learn about products and services designed to help manage and deliver retirement income.

Ready to get started? The questions above cover some key topics and if you’re ready for more, we compiled about 50 questions into a complimentary card game called “The Next Chapter,”which you can order at https://content.schwab.com/thenextchapter/. (For more on the game, including 20 questions to ponder, read Play the Retirement Flash Card Game.) It has a mix of practical questions like those above and some fun ones like “If you could take one snapshot of your family life and keep it in a frame beside your bed, what would it be?” to help you prioritize what’s important to you and visualize your future. Answer as many as feel relevant and helpful to you. To “win,” the most important thing to do is to take the first step and get started!

*August 2019 survey of approximately 500 Americans within five years of expected retirement conducted by Charles Schwab.

Investing involves risk, including loss of principal. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

The information provided is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends that you consult with a qualified tax advisor, CPA, financial planner or investment manager.

Charles Schwab & Co., Inc. Member SIPC.

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Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Joe Vietri has been with Charles Schwab for more than 25 years. In his current role, he leads Schwab's branch network, managing more than 2,000 employees in more than 300 branches throughout the country.